(a) Field of the Invention
The present invention relates to an accounting method and system, and more particularly, to an activity information accounting method and system in which accounting reports can be prepared by simply inputting business activity information such that complicated recording procedures can be avoided.
(b) Description of the Related Art
Various accounting methods are used to keep track of the business activities of a company, and to ultimately allow managers, stockholders, etc. of a company to conduct business analyses. In conventional accounting methods, after a business transaction is performed, the transaction is categorized and typical bookkeeping is performed to record the transaction.
FIG. 1 shows a flow chart of a conventional accounting method. As shown in the drawing, after a business activity is performed in step S10, it is determined if the business activity falls under the category of a commercial transaction requiring recording through book-keeping methods in step S20. If it is not (for example various internal activities), no additional procedures are performed. However, if it is determined in step S20 that the business activity is a commercial transaction, the business activity is divided into debits and credits, then the debits and credits are classified into specific journal entries in step S30. In step S30, classification into specific journal entries refers to matching the debits and credits of business activities with one of approximately 300 account titles. For example, debits include such account titles as a reduction in assets, increase in debt decrease in capital, and increase in expense, etc.; while credits include account titles such as an increase in assets, decrease in debt, increase in capital, and increase in revenue, etc.
Subsequently, a daily trial balance sheet is prepared in step S40. The daily trial balance sheet aids in ensuring that accumulated debits and credits correspond. That is, accounting mistakes can be discovered more easily by preparing daily trial balance sheets rather than waiting after a more significant time has elapsed. Next, a trial balance sheet is prepared in step S50. The trial balance sheet covers a longer period of, for example, one month. Finally, in step S60, financial statements are prepared on the basis of the trial balance sheets. The financial statements typically includes a balance sheet for a year period, an income statement, and other such documents in which information is organized into a specified format.
In the process of classifying the debits and credits into specific journal entries of step S30 above, those performing the accounting procedures must be familiar with all the roughly 300 account titles. Further, even if the financial statements sheet is prepared using a personal computer or other such data processing system, the user must nevertheless know the large number of account titles in addition to the codes corresponding to the account titles. For this reason and the fact that many other concepts, rules, etc. must be known, the conventional accounting process can only be performed by professionals.
Resulting from this fact that only trained professionals can perform accounting procedures when using conventional accounting methods, there exists a considerable lag between the time of undertaking a business activity and accounting of the same. That is, it is not possible to perform accounting procedures immediately as business activities occur since information pertaining to the business activities are first reported to an accountant or accounting department, after which accountants perform the task of recording the information.
In addition, using conventional accounting methods, business activities not failing under one of the designated specific journal entries are not reflected in the financial statements. Further, the results of accounting processes can only be known through the financial statements, which include the balance sheet and the income statement. Accordingly, merely the asset situation of the company (e.g., the cash balance), and the profit or loss for a period of time can be known, while such important measures as cash flow can not be known using these documents.
In more detail, with conventional accounting methods, profits and losses for varying lengths of time are determined through the income statement, with the amount of profit or loss is considered one of the most important measures of company performance. However, since profits and losses are calculated on the basis of returns for a company, not only can cash flow not be determined, but other measures reflecting the performance of company are not well reflected. Accordingly, complicated procedures must be used to prepare various other documents including a cash flow statement.
Finally, since only business activities determined to be commercial transactions are recorded when using conventional accounting methods, internal business activities are not reflected in the accounting reports. An example of such an internal business activity is the use of specific number of kilowatts of electricity by a department A to manufacture product B. Because these internal activities are not reflected in documents derived from conventional accounting methods, performance by department, etc. can not be known.